Extend and Pretend Is a Strategy, Not a Stall

“Extend and pretend isn’t about avoiding reality, it’s about managing risk before reality forces your hand.”

Extend and pretend has become shorthand for denial, as if lenders are simply kicking the can and hoping the market bails everyone out.

That’s not necessarily what’s happening.

In a stressed real estate environment, extend and pretend is a control mechanism. It allows lenders to manage distressed loans without forcing outcomes that destroy value on both sides of the balance sheet.

Foreclosure is costly, time-consuming, and often unnecessary when other enforcement tools already exist.

Today’s mortgage market stress isn’t driven by missed payments alone.

Rising cap rates are compressing values.

Refinancing options are limited.

And covenant breaches (not payment defaults) are increasingly the first warning signal.

Debt service coverage ratios, cash-management triggers, and maturity timelines are doing more to shape outcomes than delinquency notices.

Lenders still hold leverage. They can enforce covenants, restrict cash flow, require reserves, or restructure terms — all without taking title to the asset.

Extend and pretend becomes a way to preserve optionality while forcing borrowers to re-engage, recapitalize, or realign expectations.

The real risk emerges when communication breaks down.

Silence creates assumptions.

Assumptions create defaults.

And defaults accelerate outcomes nobody actually wants.

What we’re seeing now is not a repeat of 2008,  but it is a test.

Lenders and borrowers who navigate this period best will be the ones who understand that extend and pretend isn’t passive. It’s intentional.

If you want the deeper breakdown of how these strategies are being applied right now, the full conversation is available in this episode of Debt Doctor.

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Catch you in the next episode,

 – Bill Bymel, Debt Doctor

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